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EGBs-GILTS CASH CLOSE: Rally On Weak Data; Euro Inflation Awaits


European yields reversed lower in afternoon trade Tuesday after weak US data (job openings and consumer confidence) boosted Treasuries, pulling Bunds and Gilts with them.

  • European core FI curves moved in a bull steepening direction after the data with the short-end/bellies of the UK and German curves outperforming.
  • Bunds started the European session on the front foot, though gains were capped by Germany holding a 30-year syndication and Bobl auction.
  • Yields drifted higher most of the session until the US data switched the tone completely, with a sharp rally in both Bunds and GIlts.
  • Periphery spreads closed tighter as the US data miss buoyed risk appetite alongside falling Fed hiking prospects.
  • Attention is firmly on eurozone August flash inflation data which kicks off Wednesday with Spanish and German readings. MNI's preview went out today.
  • On Thursday we get UK DMO investor consultations - our latest UK Issuance Deep Dive also went out today.

Closing Yields / 10-Yr Periphery EGB Spreads To Germany

  • Germany: The 2-Yr yield is down 2.3bps at 3.043%, 5-Yr is down 5.4bps at 2.541%, 10-Yr is down 5.4bps at 2.51%, and 30-Yr is down 4.7bps at 2.624%.
  • UK: The 2-Yr yield is down 3.4bps at 5.246%, 5-Yr is down 2.9bps at 4.758%, 10-Yr is down 1.9bps at 4.422%, and 30-Yr is unchanged at 4.639%.
  • Italian BTP spread down 2bps at 164.1bps / Spanish down 0.7bps at 101.5bps

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